15 сентября 2023
Paolo Sorbello, photo from Akorda.kz

The Week in Kazakhstan: Enter Taxman

Tokayev lays the groundwork for a domestic business development strategy, Jusan Bank buys a stake in Kazakhtelecom.

The Week in Kazakhstan: Enter Taxman

Kazakhstan’s President Kassym-Jomart Tokayev flew to Tajikistan on September 14 to attend a consultative meeting of Central Asian heads of state in Dushanbe. At the plenary session, Tokayev proposed an action plan for the development of industrial cooperation and the establishment of a single electronic trading database.

Berik Uali returned to the post of Tokayev’s press secretary after an 18-month hiatus on September 12. Nurmukhamed Baigarayev, his predecessor, only held the position for six days and then left “for health reasons”. Before coming back to the job of press secretary, Uali headed the Khabar state news agency.

While drafting the new Tax Code, the ministry of economy said it plans to increase the corporate tax for banks, as well as mining and oil and gas companies. Vice-minister Azamat Amrin said on September 13 that the current corporate tax of 20% could be increased to 25% or 30% by the beginning of 2025.

Amrin also said that the new Tax Code will likely introduce a higher, flat value-added tax (VAT), in an effort to increase budget revenues. The previous day, Tokayev had said that 4 million residents do not pay income tax.

During a meeting with domestic business leaders on September 12, Tokayev said that local companies should have preferential access to state tenders. Such a choice would reverse the decades-long practice of special treatment for foreign investment. Tokayev also said that local service companies involved in the oil sector should become competitive in the international arena.

At the same meeting, Tokayev said that significant investment in local business would be considered a measure of goodwill for businesses who need to demonstrate the legality of their assets. In July, Tokayev signed a new law on the return of illegally-withdrawn assets.

The Financial Monitoring Agency said on September 14 that businessman Kairat Boranbayev voluntarily returned around 90 billion tenge ($191 million) in assets to the state. Boranbayev’s wealth is under investigation, as he was sentenced to eight years in prison earlier in March 2022 for embezzlement. In July, a court of appeal overturned the sentence, and a few weeks later, the entrepreneur’s lawyers said they would negotiate a deal with the authorities. On September 15, a court in Astana sentenced Boranbayev to prison for a six-year term.

The Central Elections Commission said that local elections in 45 districts and cities will take place on November 5. Three small cities, Kurchatov, Priozersk, and Rudnyi, along with 42 other regional districts will choose their governors for the first time since independence. Regional governors and mayors of larger cities will continue to be appointed by the central government.

Jusan Bank, a mid-range lender, said it bought a 9% stake in national telecoms operator Kazakhtelecom on September 14. Jusan also owns a stake in mobile operator Kcell, which it had planned to sell off last year.

Two Karakalpak activists, who had been placed in custody last year in Kazakhstan after the unrest of July 2022 in the northern region of Uzbekistan, were released from prison on September 15. A government commission had earlier denied them the status of political refugees. Their lawyers now appealed the decision and the two activists will remain in Kazakhstan until a final decision is made on their case. Three other activists are awaiting a decision on their application for political asylum.

A performance by Kamyzyaki, a Russian comedy group, was canceled in Kazakhstan after facing backlash for visiting Donetsk, in the Russian-occupied territories of Ukraine. The local organizers said that the performance was canceled following a widespread negative reaction from the public. Kazakhstan’s society has become less favorable towards Russia in recent months.